Bollinger Shipyards Lockport, LLC v. Certain Underwriters at Lloyd's , 98 F. App'x 311 ( 2004 )

United States Court of Appeals
Fifth Circuit
F I L E D
In the May 7, 2004
United States Court of Appeals Charles R. Fulbruge III
for the Fifth Circuit Clerk
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m 03-30697
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BOLLINGER SHIPYARDS LOCKPORT, L.L.C.; ET AL,
Plaintiffs,
BOSTON OLD COLONY INSURANCE COMPANY,
Plaintiff-Appellant,
VERSUS
CERTAIN UNDERWRITERS AT LLOYD’S, LONDON,
Defendant-Appellee.
_________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
m H-01-CV-708
_________________________
Before GARWOOD, HIGGINBOTHAM, and specifically to insure the trip, was left re-
SMITH, Circuit Judges. sponsible for payment to Bollinger to the ex-
tent of $900,000.
JERRY E. SMITH, Circuit Judge:*
Bollinger and Boston Old Colony sued
Bollinger Shipyards Lockport, L.L.C. Lloyd’s, alleging that the Builder’s All-Risk
(“Bollinger”), a party in the district court but Policy and CGL policy required that Lloyd’s
not a combatant in this appeal, was contracted cover the loss. On Lloyd’s’ motion for
by the Army to build cargo barges. Bollinger summary judgment, the district court found
sub-contracted AmClyde Engineered Products, that the losses fell outside the coverage of the
Inc. (“AmClyde”), to fabricate and install a Builder’s All Risk Policy and the CGL policy.
cargo crane on one of those barges, the D/B The district court accordingly dismissed all
SPRINGFIELD. claims of Bollinger and Boston Old Colony
against Lloyd’s. Only Boston Old Colony
Pursuant to the subcontract, AmClyde appeals.
named Bollinger as an Assured under its
Builder’s All Risk Policy, with appropriate re- I.
muneration to be paid to the insurer, Certain We review the district court’s legal
Underwriters at Lloyd’s, London and/or In- conclusions, including its interpretation of
stitute Companies (“Lloyd’s”). Coverage also contracts, de novo. Taita Chem. Co. v.
was extended under a Commercial General Li- Westlake Styrene Corp., 246 F.3d 377, 385
ability (“CGL”) policy issued by Lloyd’s. (5th Cir. 2001); Nolan v. Golden Rule Ins.
Co., 171 F.3d 990, 992 (5th Cir. 1999). In
Bollinger handed over the SPRINGFIELD reviewing a summary judgment, we view any
to AmClyde, which duly installed the crane on reasonably disputable facts in the light most
the barge at its facility in Slidell, Louisiana. favorable to the non-moving party, in this case
Possession of the barge then was returned to Boston Old Colony.
Bollinger, which contracted for tugboats to
transport it to Newport News, Virginia, for The insurance policies are governed by
delivery to the Army. Louisiana law, under which we utilize the gen-
eral rules of contract interpretation, requiring
The crane and its associated operator’s determination of the common intent of the
house snapped off the barge during transit and parties. See Thermo Terratech v. GDC En-
fell overboard. The accident apparently did viro-Solutions, Inc., 265 F.3d 329, 334 (5th
not result in damage to the barge, apart from Cir. 2001). The intent of the parties as
the $1.2 million loss of the craneitself. Boston reflected in the words of the policy determines
Old Colony Insurance Company (“Boston Old the proper extent of its coverage. Id.Colony”), with which Bollinger had contracted
The first question is whether the Builder’s
All-Risk Policy extended coverage to the loss
*
Pursuant to 5TH CIR. R. 47.5, the court has de- of the crane. That policy is a one-size-fits-all
termined that this opinion should not be published document, intended to apply to the numerous
and is not precedent except under the limited cir- projects AmClyde might pursue. AmClyde
cumstances set forth in 5TH CIR. R. 47.5.4.
2
could pay Lloyd’s to have additional projects er’s All-Risk Policy should be read in the
covered by the policy, with its clients named as factual context of the subcontract that required
“additional assureds.” Its provisions, then, its application, concluded that the “entire pro-
were not specially crafted to reflect the tasks ject” language referred only to the work done
associated with the installation of the crane on under the AmClyde subcontract. The court
the SPRINGFIELD, but instead were of a noted especially that the subcontract provided
more general nature. that risk of loss was intended to shift from
AmClyde to Bollinger on return of the barge
Among the Builder’s All-Risk Policy’s pro- to the latter. The subcontract stated:
visions was the following:
SUPPLIER [AmClyde] shall provide
Insurance hereunder in respect to each Builder’s All Risk Insurance for 100%
part, item, or portion of the subject mat- replacement cost for all PURCHASER
ter(s) of this insurance shall attach from [Bollinger] supplied equipment while
the time of beginning at the risk of an said equipment is in the possession of
Assured where that insurance becomes SUPPLIER [AmClyde]. Risk of loss
the responsibility of the named Assured shall pass on delivery of this LSB-18
and continued thereafter until Crane to PURCHASER [Bollinger].
completion of the entire project under
the contract(s) or agreement(s), and The parties thus contemplated that the in-
acceptance by client and/or customer surance yet to be provided by AmClyde would
and/or as per contract(s), or agree- lapse after the SPRINGFIELD was returned to
ment(s). Bollinger. It is in light of these circumstances
that the district court interpreted the contract’s
(Emphasis added.) In other words, the “entire project” language to mean only the
coverage ended when the “entire project” was work performed under the subcontract.
completed.
Boston objects to the district court’s
Lloyd’s argues that the entire project was reference to the subcontract in interpreting the
completed with the return of the Builder’s All Risk Policy. As Boston Old Col-
SPRINGFIELD to Bollinger and before the ony correctly notes, the language of the sub-
loss of the crane during the delivery trip. Bos- contract cannot overwhelm or defeat the plain
ton Old Colony contends that “entire project” language of the insurance contract. See
should be read to refer not to AmClyde’s Saavedra v. Murphy Oil USA, Inc., 930 F.2d
whole contract work for Bollinger, but rather 1104, 1110 (5th Cir. 1991). But the district
to the work to be done under the entire prime court did not act improperly by looking to the
contract. Under Boston Old Colony’s view, circumstances surrounding the inclusion of
coverage under the Builder’s All-Risk Policy Bollinger as an additional assured under the
would have ceased only when the Army Builder’s All Risk Policy. Indeed, it is
accepted the SPRINGFIELD and only after impossible to interpret the policy in any
the loss of the crane. fashion without looking to surrounding
circumstances, for its terms are almost wholly
The district court, reasoning that the Build- generic.
3
Further, the existence and nature of the The delivery trip of the SPRINGFIELD
subcontract are among the most important was very short, as the parties elucidated at oral
circumstances relevant to the interpretation of argument, only from AmClyde’s facilities to
the policy. It was no error for the district the custody of towing vessels contracted by
court to look to the subcontract in concluding Bollinger, just outside of Slidell. For that
that the likely meaning of “entire project” un- matter, there was evidently no “remodeling” or
der the policy was limited to the completion of “repairs” planned or undertaken as part of
work under the subcontract. The court’s ref- AmClyde’s work under the subcontract––the
erence to other circumstances surrounding the language is included merely to note the many
policy, such as its price and the typical extent circumstances covered by Lloyd’s’ generic and
of builder’s all risk policies as a species, was widely applicable Builder’s All Risk Policy.
likewise appropriate. The “Delivery Trip” language cannot be read
to suggest that the “entire project” language
In addition to its criticism of the district was intended to cover events after the
court’s use of the subcontract, Boston Old completion of AmClyde’s own subcontract.
Colony points to language in the policy that
Boston Old Colony contends supports its in- Similarly, language in the Policy noting
terpretation of “entire project.” Primarily, that the coverage of the policy extended
Boston Old Colony points to provisions in the “worldwide” (with exceptions for icy ports of
policy that it says support its view that the call) is evidence neither that AmClyde
policy extends coverage for the duration of the expected to move the SPRINGFIELD across
prime contract. The provisions Boston Old the Seven Seas, nor that the Louisiana-to-
Colony cites, however, are illustrative only of Virginia trip was covered by the contract.
the contract’s wide expansive coverage, not Again, evidence of the policy’s expansive spa-
of its temporal extent. tial coverage is not probative of its temporal
extent.1
For instance, Boston Old Colony notes that
the policy explicitly extends its coverage to Boston Old Colony’s arguments are
“prefabrication and/or fabrication and/or erec- unconvincing, and, as the district court
tion and/or construction and/or installation observed, the nature of the Builder’s All Risk
and/or repairs and/or remodeling and/or Policy and the circumstances surrounding its
movements by any means (including ocean extension of coverage to Bollinger as an
transits by steamer(s) and/or motor vessels(s) additional assured support the conclusion that
and/or barge(s) in tow).” This generic coverage ended at the completion of
language underscores the intended effect of AmClyde’s “entire project” under the
the contract to cover damages resulting from subcontract.
all manner of activities in which AmClyde
might engage while undertaking its work. The
“Delivery Trip” language was not added in 1
Boston Old Colony notes that under Adden-
contemplation of the voyage of the SPRING- dum 21 of the Builder’s All Risk Policy, a main-
FIELD from Louisiana to Virginia, but rather tenance risks clause may extend coverage of the
to encompass any and all “transits” of a Builder’s All Risk Policy for up to a year. There
covered item from one place to another. is, however, no evidence to show that any such
extension was exercised.
4
within the contract such an addendum actually
II. appears. A heading concerning such a policy
Boston Old Colony also asserts, separately appears in the table of contents but was ex-
from its arguments concerning the Builder’s pressly “subject to full wording to be agreed to
All Risk Policy, that the CGL policy should by Underwriters of the Assured.” Because
have provided coverage of the loss of the such an addendum was never agreed upon, it
crane and pilot house. It is undisputed that the is not now a part of the contract. The
temporal coverage of the CGL policy extended “professional services” exclusion must apply
past the handover of the SPRINGFIELD. Its with full force.
express terms, however, included exclusions
that prevent the loss of the crane from The CGL policy would have acted to cover
coverage under the policy. damage that the destruction of the crane
caused to other parts of the SPRINGFIELD,
The relevant exclusions were the “faulty but it cannot cover the failure of the crane.
workmanship” exclusion, also known as the Boston Old Colony has not alleged that the
“business risk” exclusion, and the “profession- loss of the crane damaged other parts of the
al services” exclusion. The district court con- SPRINGFIELD.
cluded that these exclusions placed outside the
coverage any damages to the crane itself, AFFIRMED.
where they resulted from poor work by either
AmClyde’s skilled laborers or its professional
staff. They function to leave the risk of
replacing or repairing defective materials as a
commercial risk of the purchaser. In other
words, they prevent a commercial liability pol-
icy from becoming a product or service war-
ranty.
Inasmuch as the loss of the crane may be,
as Boston Old Colony alleges, the result of
faulty welding and ot her bad work by Am-
Clyde’s blue collar employees, the loss falls
under the “faulty worksmanship” exclusion.
Because loss of the crane was the result of
poor design by AmClyde’s engineers, as Bos-
ton Old Colony alternatively contends, the loss
falls under the “professional services”
exclusion.
Boston Old Colony also argues that a sep-
arate “Architects / Engineers Professional Lia-
bility Policy” was added to the CGL policy,
but Boston Old Colony cannot show where
5